Scholars: If Prolonged Hormuzes Strait Blockade Causes Inflation Rebound, Fed May Hike Rates | Homebody Finance

GateUser-bd883c58 · 2026-03-19T03:36:16+00:00

US stock indices closed lower across the board, with crude oil prices breaking through $100 per barrel. Iran's Supreme Leader stated that strategic measures will continue, while market expectations regarding Federal Reserve rate cuts have shifted. Experts indicate that the situation in the Strait of Hormuz will impact the rate-cutting timeline. If tensions persist, it will intensify inflationary pressures and could lead to a pause in rate cuts or further rate hikes.

GateUser-bd883c58

2026-03-19 03:36:16

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[Homeboy Finance | Expert Face-to-Face] On Thursday Eastern Time, the three major U.S. stock indices all closed lower. Crude oil prices surged, with Brent crude oil closing above $100 per barrel for the first time since August 2022.

According to CCTV News, Iran’s newly appointed Supreme Leader, Muqtada al-Hassan, delivered his first statement on the 12th via national television, mentioning that Iran will continue to adopt strategic measures including blocking the Strait of Hormuz, and will open new fronts if necessary.

Against this backdrop, market expectations for whether the Federal Reserve will cut interest rates this year are being reassessed. How will the Federal Reserve’s future monetary policy evolve? Hu Jie, a professor at Shanghai Jiao Tong University School of Advanced Finance, told Homeboy Finance that before this conflict occurred, the market generally expected the Fed to cut rates twice or more this year, with a total reduction of over 50 basis points, implying further easing of the dollar. However, after the incident, inflation expectations have noticeably weakened.

“Therefore, the key factor is how long the blockade of the Strait of Hormuz and the resulting oil supply disruptions will last,” Hu Jie pointed out. If the situation is under control within two weeks and shipping lanes are restored, the Fed’s pace of rate cuts this year is unlikely to see significant adjustments. However, if the blockade persists for a longer period—one month, two months, or even longer—causing oil supply chaos, it will push up oil prices and intensify inflation pressures. The Fed may adopt a wait-and-see approach and pause rate cuts.

“In extreme cases, if inflation rebounds sharply, further rate hikes cannot be ruled out,” Hu Jie added.

Note: The views expressed are for reference only and do not constitute investment advice. Investing involves risks; please proceed with caution.

(Produced by Zheng Zheng, edited by Dong Xiangyi, Homeboy Finance Production)

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